The Canadian Dollar (CAD) has seen a moderate increase alongside the Mexican Peso (MXN) as new tariffs on steel and aluminium were implemented. Ongoing tariff discussions continue to influence market conditions, with US manufacturers facing increased input costs.
Canada is a major aluminium supplier to the US, which may pressure the Bank of Canada to consider lowering interest rates. A 25 basis points cut may occur at today’s policy decision, reducing the Target rate to 2.75%, with expectations of further easing by late this year.
Usd Cad Trading Range
USD/CAD is expected to trade within a range of 1.4350 to 1.4550. Recent price movements indicate some firmness in the CAD, while the USD may face resistance around 1.4525/50, with lower support levels at 1.4400/05 and targets near 1.4350/75.
The moderate rise in both the Canadian and Mexican currencies comes as fresh tariffs on steel and aluminium reshape expectations. Discussions around trade policy continue to have a direct influence, especially as American manufacturing firms contend with elevated costs. The increased expenses will likely ripple through production lines, affecting pricing and profitability.
Canada plays a key role in supplying aluminium to the United States, and that dynamic puts monetary policymakers in an interesting position. Lowering interest rates would help offset some of the economic strain introduced by these tariffs. If the widely expected 25 basis points rate cut happens during today’s meeting, the benchmark rate will move down to 2.75%. Forward guidance suggests further easing before the end of the year, as inflationary pressures come into play alongside trade adjustments.
Currency markets have already begun absorbing these expectations. The current price range for USD/CAD suggests that some stability has emerged, with resistance shaping up near the 1.4525/50 corridor. On the lower side, 1.4400/05 has provided some footing, and there is a clear target area near 1.4350/75. Price action in recent days has indicated that, while CAD has strengthened slightly, the USD still commands some resilience.
Trading Strategies And Market Outlook
For those trading derivatives, the coming weeks present a mix of opportunity and required patience. A potential reduction in Canada’s interest rates, combined with ongoing trade adjustments, could introduce swift movements as markets reassess fair value. Observing how USD/CAD behaves near the key technical zones may give early signals of whether further gains or retracements are likely. With policy adjustments on the table, especially from both central banks and government trade negotiations, positioning will require both flexibility and a sharp eye on unfolding economic indicators.
